If you rent an apartment, a house, or a condo, you will need renter’s insurance. Your landlord most likely has an insurance policy that covers the entire rental property, but it usually doesn’t cover tenant’s personal property and liability. In fact, many landlords encourage renters to get insurance.
In order to determine the amount of personal property coverage, you need to know how much your property is worth. Many people underestimate what their property value is and don’t think it is worth getting insurance. However, it is not uncommon for an average person to own at least $20,000 in personal property and that’s how much you may be risking by avoiding purchasing an insurance policy. Also, many people don’t realize that they are liable for any accidents that may happen in their home, for example if a visitor breaks a leg during a party. That’s why renter’s insurance is such an important expense and it usually covers the following:
– Personal property including items that temporarily are off the premises.
– Liability, which refers to medical and legal expenses that may result from someone being injured on your property.
– Extra living expenses should your apartment become uninhabitable.
The goal of renter’s insurance is to help you to restore your lifestyle in case of a loss. There are two types of policies available that serve that purpose: a replacement cost policy, which pays what is required to replace all insured items and an actual cash value policy that refers to the fair market value or estimated current value of all insured items and will pay you the amount needed to replace those items after depreciation. The difference between the original prices that you paid for your property and its value today will be your responsibility.
In order to find out how much coverage you need you will need to take an inventory of your property. List every item: when it was purchased, at what price, its estimated current value, and any unique features. You can even use a video camera to record your belongings. If you are not sure how to assess value of your property, let your insurance agent help you. In addition to that, take a photo of each item on the list.
Most types of property are covered by a standard renter’s policy, but certain items, like those listed below, usually have a limit how much they can be insured for and may require additional insurance to be purchased:
– Jewelry, furs and watches
– Money, coins
– Business property
The inventory process may be time consuming, but it is very important part of determining the value of your property and how much insurance you need. In case of a loss, the documentation will be necessary in processing your claim. Make sure that your master copy of the insurance policy and the list of your belongings along with pictures are stored safely somewhere away from your home, like in a bank safe deposit box.